When I set permission using the simple permissions found under the security tab, everything works fine. The permissions are properly applied and are propagated to subfolders and files.
But when I try to do the same thing using the advanced settings dialogue the permissions are only correctly applied to the folder I set them on. The permissions are not properly inherited by subfolders. See videos below
Setting permissions using simple screen
http://dev.orbitmicro.com/videos/permission%20using%20simple%20view/Setting permissions using advanced settings screen
http://dev.orbitmicro.com/videos/permission%20using%20advanced%20view/Start Free Trial